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2022 (6) TMI 684 - AT - Income TaxRevision u/s 263 - Deduction u/s. 54 of the act is not allowable - HELD THAT - As it is not the case that the AO has not made enquiry. Indeed, the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 54 - It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. We thus find no error in the order of Ld. AO so as to justify the initiation of 263 proceedings by the Ld. Pr. CIT. assessee's contention is thus allowed. We find that the AO based on the BU permission from Ahmedabad Urban Municipal Corporation dated 29-09-2011 has concluded that the construction was completed for the property after the date of transfer of the property. Admittedly, the BU permission is issued by the local authority which evidences that the construction of the building is within the parameters laid down by the government agencies and therefore the same can be used for the object for which it was constructed. To our understanding, the BU permission appears to be of significant document which is necessary to reach to the conclusion that the construction of the building has been completed in all respects. Thus, we deemed it fit to hold that the AO has taken one of the possible view which cannot be termed as erroneous insofar prejudicial to the interest of revenue in the manner as provided under section 263 of the Act. We hold that there is no error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revision order passed by the learned PCIT is not sustainable and therefore we quashed the same. Hence the ground of appeal of the assessee is allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Assumption of jurisdiction under section 263 of the Income Tax Act, 1961. 3. Disallowance of deduction under section 54 of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: 1. Delay in Filing the Appeal: The assessee filed an appeal with a delay of 262 days. The reasons for the delay were detailed in an affidavit, citing health issues and family emergencies. The assessee's representative argued that there was sufficient cause for the delay, warranting its condonation. The Revenue opposed the condonation, arguing that the reasons were not supported by documentary evidence. The Tribunal, referring to various judicial precedents, including the Supreme Court's judgment in Vedabai v. Shantaram Baburao Patil, emphasized that substantial justice should be preferred over technicalities. The Tribunal concluded that there was a reasonable cause for the delay and condoned it, allowing the appeal to be heard on its merits. 2. Assumption of Jurisdiction under Section 263 of the Income Tax Act, 1961: The Principal Commissioner of Income Tax (PCIT) held that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interests of the Revenue under section 263 of the Act. The PCIT argued that the AO failed to verify the eligibility of the assessee's claim for deduction under section 54. The assessee contended that all necessary details were furnished during the assessment, and the AO had made adequate inquiries. The Tribunal referred to judicial precedents, including the Delhi High Court's judgment in CIT v. Sunbeam Auto and the Bombay High Court's judgment in Gabriel India Ltd., emphasizing that an order cannot be deemed erroneous merely because the inquiry was considered inadequate by the PCIT. The Tribunal concluded that the AO had made proper inquiries and applied his mind to the facts, and therefore, the assessment order was not erroneous or prejudicial to the interests of the Revenue. Consequently, the revision order under section 263 was quashed. 3. Disallowance of Deduction under Section 54 of the Income Tax Act, 1961: The PCIT found that the assessee had applied for Building Use (BU) permission before the sale of the property, suggesting that the construction of the new house was completed before the transfer of the old property. According to the PCIT, this disqualified the assessee from claiming deduction under section 54, which requires the new house to be constructed within three years after the transfer. The Tribunal noted that the AO had accepted the BU permission dated 29-09-2011 as evidence of the completion of the construction after the transfer date. The Tribunal held that the AO's view was a possible one and could not be deemed erroneous. Therefore, the assessment order allowing the deduction under section 54 was upheld. Separate Judgments: The Tribunal delivered a combined judgment for both appeals. In ITA No. 318/Ahd/2018, the appeal was allowed, quashing the revision order under section 263. In ITA No. 670/Ahd/2019, the appeal was dismissed as infructuous since it arose from the quashed revision order. Conclusion: - The delay in filing the appeal was condoned. - The assumption of jurisdiction under section 263 was quashed. - The disallowance of deduction under section 54 was overturned, upholding the original assessment order.
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